“Money is not god, but not less than god”. This line may sound repetitive and tired but its impact in one’s life is unmatchable. We can say Money is only tangible power which runs the universe. We all are fighting with our life to earn it, but many of us fall short to earn sufficient. Then there is a phenomenon called loans, which still support us to survive. We take loans to fulfil our requirement.
There are lenders who give loans. But what if we are unable to pay debt against our loans.
Types of Loans
Mainly, there are two types of loans available, secured and unsecured. Talking of secured loans, all the major loans are referred as secure loans i.e. home loans, car loans etc. These loans are called secured loans because collateral is kept against the loan acquired. This mode of loan sanction is totally legal and approved. It has a set norms and values of sanctioning and repayment of the money.
On other hand, unsecured loans are more alluring and seem too simple. In this type, no collateral is demanded against the loan sanctioned. All loans payment is done on the thread of trust and promise. Nothing is on stake. Generally, there are no fixed rules to repay the loans.
Pros and Cons
When you lend secured loan, you have any property at stake against that money. So, if you fail to return the money, you may have to lose the property, or may you get imposed with further charges.
But, regarding unsecured loans, they run totally different. According to law, lenders don’t have any right to sell your property for repayment of loan. So, in case if you can’t repay it, nothing on stake. But, unfortunately this is not an advantage; this is the biggest disadvantage of this form of loan.
Lender often uses very harsh collection attempts from defaulter. Moreover, defaulter loses its credit in the market which can cause larger setback.
Generally, unsecured loans are lent by private lender on higher interest rates. Repayment of loan may end on the double of the money lend by the lender, due to very high interest rates.
Lent safe, be safe
Although, all the loans you take whether it is secured or unsecured, need timely repayment. Debt are responsibility which should be fulfilled otherwise, it may harm your wealth. But, in case of deliberate bankruptcy, secured loans have few options of debt relief and their way of repayment is also generous and mild but not necessarily in case of unsecured loans. They may take some harsh steps against defaulter and can have a severe setback on you.
About the Author
The author of this article is associated with Your Loan Advisors. For more information about Unsecured Personal Loans please visit her website at YourLoanAdvisors.com